Ireland will inevitably exit Eurozone

In 1997 Total bank lending to Irish Residents – €56 billion – €48 billion
(87%) financed by Irish retail deposits

In 2009 Total bank lending to Irish residents – €365 billion – €171 (47%) billion by Irish retail deposits.

The Euro freed the Irish banks from the drag of funding lending from Irish retail deposits through the Euro mechanisms.

National Debt in Ireland by end of 2010 – €95 billion.

Bank recapitalisation plus NAMA – €80 billion = total €175 billion

End of 2011 total €190 billion

Irish owned banks have total loans in Ireland and overseas of €372 billion.
Take the bad loans out of this that are heading to NAMA and that leaves another €291 billion heading for the Irish taxpayer’s liability

Grand total liability – €466 billion which will be €481 at end of next year.

In 2007 Irish GNP peaked at €160 billion

End of 2010 GNP will be €126 billion down 22% – due to 16% decrease in real economy and falling prices.

Dan White in the Sunday Independent asks how can a €126 billion economy support a debt load of €250 billion?

Basically a debt restructuring will have to happen. Ireland may be forced out of the Euro to avoid a decade of economic paralysis.

The official fiscal deficit may hit 18% of GDP this year due to the addition of €11 billion of 10 year promissory notes to Anglo Irish Bank and Irish Nationwide Building Society because Eurostat will add these to our deficit.

Can you imagine the effect on Irish bond prices

10-year Bond yields at 4.30 Friday 7th May 2010-05-09 Greece 12.2%; Portugal 6.2%; Ireland 5.9%; Spain 4.4%; Italy 4.2% Germany 2.8%

Conclusion – Greek position is unsustainable. Portugal and Ireland are in trouble.